Inflation and your savings: fragile in nature

There have been some significant moves in the market for savings products this week, mostly driven by concerns about inflation.

Santander has looked to muscle into the space vacated by NS&I, who announced a withdrawal of their popular inflation-linked Investment Accounts in November.

Following their self-acclaimed ‘revolutionary’ up-front interest bond, Santander’s Inflation-Linked Savings Bond pays the rise in the Retail Price Index over a six-year period.

[Read more at Which4U]

Revolution is a more powerful term than most people realise. It implies a rising order to be witnessing – and even delighting in – its overthrow of an old and failing order.

So, how does that work exactly for a savings account?

Santander’s new Upfront Interest Bond has caused some controversy across the web this week, so perhaps it’s time to investigate this particular product a little closer.

[Read more at Which4U]

Those who have decided to move on to further education by going to university have been warned that their personal possessions may not actually be automatically covered by general annual insurance at their halls of residence.

This is the opinion of the head of consumer finance at Love Money, Ed Bowsher.

Mr Bowsher has urged future scholars to take the time to find out if they are protected before moving into their home-from-home, so as to avoid any potential confusion or unexpected high costs whilst studying.

The expert went on to say that “students should also check their parents’ home insurance policies,” adding that “some policies will cover students even if they’re living away from home” (more…)

Nationwide have increased their rates on a wide range of its saving products from last week (September 7th).

The interest that is paid on their six-month and one-year Fixed Rate Bonds and e-Bonds has raised by 0.2 per cent. This will also apply to their 18 month Tracker Bond and Tracker e-Bond.

As well as this, Nationwide have also announced the launch of a new two-year deal to go along side their existing three-year option, which is set to stay the same.

For Fixed Rate ISAs, the rate has grown by the same percentage for the one-year deals, stays the same for the three-year option and there is a new two year account now available to customers.

In related news from Nationwide, there has been an interest increase on their MySave Online Plus account, and in addition to this a new 75 Day Saver product has now been launched by the bank.

Richard Marriott, head of savings at Nationwide, has recently said: “As one of the country’s leading savings providers we aim to ensure our savers get a competitive return on their money and these new rates will help do just that. In the current climate, it is important to cater for a variety of savings needs.” (more…)

By taking the time to analyse the best ISA rates on offer in the UK, is one of the most appealing options available to consumers who are struggling for cash but still want a chance to store funds in a competitive savings accounts.

This is the opinion of the director for independent advisory firm Ark Financial Planning, Phil Perry – who has insisted that it is possible for people without large funds available to them, to plan ahead when it comes to their financial future.

Mr Perry went on to explain that the most suitable products for individuals who have “absolutely no savings whatsoever” are “deposit-based” accounts, as these tend to provide a more flexible way to bank, in terms of allowing the account holder easy access to their money.

“The first port of call would always be an ISA, depending upon the client’s tax position of course. There are many facilities out there these days [where you can] find the best scheme,” noted Mr Perry.

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With the massive increases in some university fees that are being introduced next year, it is more necessary than ever that students make the most of their money to stop themselves coming out with massive debts.

One spokeswoman for online resource Moneyfacts, believes that those wanting to go on to higher education should consider taking a year out in order to save money in ISAs. She went on to say that, where possible, students should priorities building up savings accounts before embarking on their degree course.

Currently, most British students will be getting prepared to start the 2011/12 academic year which starts in September, and the majority of these will more often than not plan on getting through their time at university on their student loans and in some cases an overdrafts on student accounts.

This can be very hard to do with tuition fees now averaging at the top £9,000 on top of the need to pay for groceries and utilities.

However, taking the advice of the Moneyfacts experts, by planning ahead and saving up for a couple of months prior to your course beginning, students can provide themselves with a strong financial safety net that could help them to avoid serious financial debt on completing their course.
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Regularly putting money away into savings can be hard enough without worrying about scour savings market in order to find a account that offers the best interest rates.

UK interest rates have been kept at the record low of 0.5% since March 2010 and there are no signs that it will improve any time soon.

This means that banks are continuing to struggle to offer savers a decent rate on their savings.

However, despite the low base rate there are ways in which savers can boost the earnings from their surplus funds, some adding in the element of risk.

Tax Free Savings Accounts

Some people may be surprised learn that the earnings made from the interest paid on savings accounts and investments is taxed.

The income tax percentages depends on your annual earnings, but can be up to 50% which means you would be losing half of any returns to the tax-man. (more…)

Savers should check the interest rate paid on their Individual Savings Accounts (ISAs) to avoid being caught out by bonus introductory offers.

Generally speaking, the best ISA rates available on today’s savings market come with a catch – the high rates on offer are likely to fall after 12 months.

This is due to providers offering bonus rates in order to attract more custom. However, once the bonus rate expires, the level of interest paid on your savings is likely to fall significantly, leaving you earning less than you could be elsewhere.

A report from the Office of Fair Trading found that just 11% of savers that hold an ISA will switch to a new provider each year.

Savings plan (more…)

Any savers prepared to lock their savings away for an extended period of time have the potential to earn the best interest rates on the savings market, according to the financial information company Moneyfacts.

The firm has revealed that interest rates paid on fixed rate bonds with relatively short fixed terms have been rising since last August.

However, despite increasing rates savers are still worse off than they have been in recent years as decent returns are still had to come by due to record lows to the Bank of England base rate which has been sat at 0.5% since March 2009.

The encouraging movement suggests the Bank rate will rise in the coming months which would be passed on to savers through improved returns on savings accounts.

According to Moneyfacts, savers can expect to lock in on a rate of 2.85% with the average one-year fixed rate bond which marks the highest levels in over a year. (more…)

As the base rate remains at an all time low, many savers are reaching an unexpected dilemma.

The deputy governor of the Bank of England says that low interest rates should encourage savers to go out and spend their money in order to help kick-start the economy.

Charlie Bean, a member of the committee that determine the Bank rate, advised savers to “eat into” the capital they have built up throughout periods of low rates – now being as good a time as any, as the Bank rate has been at a record low of 0.5% since March 2009.

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